Earn-Out Payments. On the terms and subject to the conditions of this Section 1.4, the Buyer shall issue and deliver to the Sellers, and the Derivative Securities Holders who exercise their Derivative Securities on or before the Closing Date, following the Closing, in the proportions set opposite their respective names on Schedule 1, the Consideration Shares, if and to the extent earned as provided in this Section 1.4, in an aggregate amount equal to the total Consideration Shares, less (i) the Consideration Shares constituting the Closing Date Purchase Price after the reallocation as provided in Section 1.3(c) above, and (ii) the Consideration Shares constituting the Contingent Consideration (the “Earn-Out Amount”), which shall be due and payable in two equal installments as follows: (i) The first 50% of the Earn-Out Amount (the “First Earn-Out Payment”) shall be due upon the occurrence of the First Earn-Out Event on or before eight (8) years following the Closing Date. The second 50% of the Earn-Out Amount (the “Second Earn-Out Payment”, and together with the First Earn-Out Payment, collectively, the “Earn-Out Payments”, and individually an “Earn-Out Payment”) shall be due upon the occurrence of the Second Earn-Out Event on or before eight (8) years following the Closing Date. (ii) The First Earn-Out Event or the Second Earn-out Event means any one of the following events, whichever occurs first: the initiation of the first human dosing in a Phase 2 clinical trial (A) under a U.S. Investigational New Drug Application, or (B) such other drug application, approvable by the applicable ministry of health, as Buyer in its sole discretion determines is appropriate for any currently identified Company product candidate, including a second-generation version of Syn 1001, Syn 1002, Syn 2001, Syn 2002 or any variation thereof, as well as any additional product candidates derived in whole or in part from the Company’s product pipeline or research and development technology platform which additional product candidate(s) are mutually acceptable to Buyer and Sellers’ Agent (each a “Qualified Product Candidate”). (iii) The foregoing notwithstanding, any remaining unpaid portion of the Earn-Out Amount shall be deemed earned and shall be due and payable to Sellers in the event of the occurrence on or before eight (8) years following the Closing Date of either of (A) the initiation of Phase 3 clinical trials of a Qualified Product Candidate, subject to review and approval of the FDA or other applicable ministry of health as Buyer in its discretion deems is appropriate, or (B) the entering into of a definitive collaboration agreement between Buyer or the Company and a third party with respect to the development or commercialization of any Qualified Product Candidate which includes material present or future consideration payable by such third party to the Buyer or the Company, whether in the form of upfront payments, future milestone payments, reimbursements of clinical trials or other development expenses, royalties or investments. (The First Earn-Out Event, the Second Earn-Out Event and the events set forth in the foregoing clauses (A) and (B) are herein referred to collectively as the “Earn-Out Events”, and individually as an “Earn-Out Event”).” (iv) Anything herein to the contrary notwithstanding, no Consideration Shares shall be delivered to Sellers from the Reallocation Escrow Sub-Account or the Earn-Out Escrow Sub-Account until the final determination of the reallocation, if any, of any Consideration Shares from the Closing Date Purchase Price to the Earn-Out Payments as provided in Section 1.3(c) above.
Appears in 1 contract
Samples: Stock Purchase Agreement (Sonus Pharmaceuticals Inc)
Earn-Out Payments. On As additional consideration for the terms Interests, and subject to the conditions of this Section 1.4, the Buyer shall issue and deliver to the Sellers, and the Derivative Securities Holders who exercise their Derivative Securities on or before the Closing Date, following the Closing, in the proportions set opposite their respective names on Schedule 1, the Consideration Shares, if and to the extent earned as provided in this Section 1.4, in an aggregate amount equal to the total Consideration Shares, less (i) Seller’s compliance with Section 8.4 hereof and the Consideration Shares constituting Services Agreement, (ii) compliance with the Closing Date Purchase Price after the reallocation as provided in Section 1.3(c) aboveSoane Agreement by Xx. Xxxxx and Soane Labs LLC, and (iiiii) Buyer’s right of offset pursuant to Section 9.3 hereof, Buyer shall deliver an unsecured contingent note to Seller, in substantially the Consideration Shares constituting form attached as Exhibit C-1 hereto (the Contingent Consideration “Earn-Out Note”), pursuant to which Seller shall be entitled to receive additional consideration from Buyer (the “Earn-Out Amount”), which shall be due and payable in two equal installments as follows:
) during the five (i5) The first 50% of year period (the “Earn-Out Amount (the “First Earn-Out PaymentPeriod”) shall be due commencing upon and following the occurrence first calendar day of the First Earn-Out Event on or before eight month which includes the second (8) years following 2nd) anniversary of the date that is the earlier of (x) the date of Commercial Sale (as defined below) and (y) the date that is six (6) months after the Closing Date. The second 50% of the Earn-Out Amount Date (the “Second Earn-Out Payment”, and together with the First Earn-Out Payment, collectivelysuch date, the “Earn-Out PaymentsCommencement Date”), equal to (i) fifty percent (50%) of the cumulative Product Margin for the Earn-Out Period, minus (ii) the total of all Marathon Payments made (A) during the Earn-Out Period and (B) prior to the Earn-Out Commencement Date and not otherwise satisfied from the Escrow Amount, on and subject to the terms contained herein, and individually which Earn-Out Amount shall be payable by Buyer to Seller as follows (each of the following payments, an “Earn-Out Payment”):
(1) shall be due upon within sixty (60) days following the occurrence last day of the First Measuring Period, an amount (the “First Payment”) equal to (A) fifty percent (50%) of the cumulative Product Margin for such First Measuring Period (if positive), minus (B) the total of all Marathon Payments made (i) prior to the Earn-Out Commencement Date and not satisfied from the Escrow Amount and (ii) during the First Measuring Period;
(2) within sixty (60) days following the last day of the Second Measuring Period, an amount (the “Second Payment”), equal to (x) fifty percent (50%) of the cumulative Product Margin for all then-completed Measuring Periods (if positive), minus (y) the total of all Earn-Out Event on or before eight Payments previously paid by Buyer to Seller for all prior completed Measuring Periods, minus (8) years following z) the Closing Date.
total of all Marathon Payments made prior to the completion of the Second Measuring Period (ii) The First including any Marathon Payments made prior to the Earn-Out Event Commencement Date) that were not satisfied from the Escrow Amount or the Second previously subtracted from a prior Earn-out Event means any one Out Payment;
(3) within sixty (60) days following the last day of the following eventsThird Measuring Period, whichever occurs first: the initiation an amount equal to (x) fifty percent (50%) of the first human dosing in a Phase 2 clinical trial cumulative Product Margin for all then-completed Measuring Periods (Aif positive), minus (y) under a U.S. Investigational New Drug Applicationthe total of all Earn-Out Payments previously paid by Buyer to Seller for all prior completed Measuring Periods, or minus (Bz) such other drug application, approvable by the applicable ministry total of health, as Buyer in its sole discretion determines is appropriate for all Marathon Payments made prior to the completion of the Third Measuring Period (including any currently identified Company product candidate, including a secondMarathon Payments made prior to the Earn-generation version of Syn 1001, Syn 1002, Syn 2001, Syn 2002 or any variation thereof, as well as any additional product candidates derived in whole or in part Out Commencement Date) that were not satisfied from the Company’s product pipeline Escrow Amount or research and development technology platform which additional product candidate(s) are mutually acceptable to Buyer and Sellers’ Agent (each previously subtracted from a “Qualified Product Candidate”).prior Earn-Out Payment;
(iii4) The foregoing notwithstandingwithin sixty (60) days following the last day of the Fourth Measuring Period, an amount equal to (x) fifty percent (50%) of the cumulative Product Margin for all then-completed Measuring Periods (if positive), minus (y) the total of all Earn-Out Payments previously paid by Buyer to Seller for all prior completed Measuring Periods, minus (z) the total of all Marathon Payments made prior to the completion of the Fourth Measuring Period (including any remaining unpaid portion Marathon Payments made prior to the Earn-Out Commencement Date) that were not satisfied from the Escrow Amount or previously subtracted from a prior Earn-Out Payment;
(5) within sixty (60) days following the last day of the Fifth Measuring Period, an amount (the “Fifth Payment”) equal to (x) fifty percent (50%) of the cumulative Product Margin for the Earn-Out Period (if positive), minus (y) the total of all Earn-Out Payments previously paid by Buyer to Seller for all prior completed Measuring Periods, minus (z) the total of all Marathon Payments made prior to the completion of the Earn-Out Amount shall be deemed earned and shall be due and payable to Sellers in the event of the occurrence on or before eight Period (8) years following the Closing Date of either of (A) the initiation of Phase 3 clinical trials of a Qualified Product Candidate, subject to review and approval of the FDA or other applicable ministry of health as Buyer in its discretion deems is appropriate, or (B) the entering into of a definitive collaboration agreement between Buyer or the Company and a third party with respect to the development or commercialization of including any Qualified Product Candidate which includes material present or future consideration payable by such third party to the Buyer or the Company, whether in the form of upfront payments, future milestone payments, reimbursements of clinical trials or other development expenses, royalties or investments. (The First Earn-Out Event, the Second Earn-Out Event and the events set forth in the foregoing clauses (A) and (B) are herein referred to collectively as the “Earn-Out Events”, and individually as an “Earn-Out Event”).”
(iv) Anything herein to the contrary notwithstanding, no Consideration Shares shall be delivered to Sellers from the Reallocation Escrow Sub-Account or the Earn-Out Escrow Sub-Account until the final determination of the reallocation, if any, of any Consideration Shares from the Closing Date Purchase Price Marathon Payments made prior to the Earn-Out Commencement Date) that were not satisfied from the Escrow Amount or previously subtracted from a prior Earn-Out Payment. For purposes of clarification, cumulative Product Margin may be less than Zero Dollars ($0); provided that in no event shall an Earn-Out Payment be less than Zero Dollars ($0). The First Measuring Period, Second Measuring Period, Third Measuring Period, Fourth Measuring Period and Fifth Measuring Period shall be collectively, and as context dictates, individually, referred to as “Measuring Periods.” Upon the expiration or termination of the Earn-Out Period (including pursuant to Section 2.4(i)), any remaining payment obligations pursuant to the Marathon Agreement (including any Marathon Payments as provided for which payment has not been made from the Escrow Amount or was not subtracted from Earn-Out Payments) shall be assigned to and assumed by Seller (and Buyer shall be released from same and indemnified by Seller for such amounts). For the avoidance of doubt, a Marathon Payment is considered subtracted from an Earn-Out Payment only to the extent it reduces a positive amount to an amount greater than or equal to Zero Dollars ($0) (but not to the extent that it results in Section 1.3(c) abovea negative amount), for any Measuring Period; provided, that any negative amount resulting therefrom will carryover to the next subsequent Measuring Period or will be owed by Seller at the end of the Fifth Measuring Period.
Appears in 1 contract
Earn-Out Payments. On the terms and subject to the conditions of this Section 1.4, the Buyer shall issue and deliver to the Sellers, and the Derivative Securities Holders who exercise their Derivative Securities on or before the Closing Date, following the Closing, in the proportions set opposite their respective names on Schedule 1, the Consideration Shares, if and to the extent earned as provided in this Section 1.4, in an aggregate amount equal to the total Consideration Shares, less (i) With respect to each of calendar years 2006, 2007 and 2008 (the Consideration Shares constituting "Earn-Out Period"), the Closing Date Purchase Price after the reallocation as provided in Section 1.3(c) above, and (ii) the Consideration Shares constituting the Contingent Consideration shall be increased by an amount (the “"First 2006 Earn-Out Amount”)," "First 2007 Earn-Out Amount," and "First 2008 Earn-Out Amount," as applicable, and, collectively, the "First Earn-Out Amounts") equal to (x) ten percent (10%) (the "First Earn-Out Percentage") of (y) the amount, if any, by which shall be due and payable in two equal installments as follows:
(i) The first 50% of the Earn-Out Amount Revenue for such calendar year, as finally determined under this Section 2.6, exceeds Two Hundred Million Dollars ($200,000,000) (the “"First Earn-Out Payment”) Hurdle"); provided, however, that in no event shall be due upon the occurrence aggregate amount of the First Earn-Out Event on or before eight Amounts exceed Ten Million Dollars (8) years following $10,000,000) (the Closing Date. The second 50% of "First Maximum Earn-Out Amount").
(ii) With respect to each calendar year in the Earn-Out Amount Period, the Purchase Price shall be further increased by an amount (the “"Second 2006 Earn-Out Amount," "Second 2007 Earn-Out Amount," and "Second 2008 Earn-Out Amount," as applicable, and, collectively, the "Second Earn-Out Payment”, and together with Amounts") equal to (x) ten percent (10%) (the First "Second Earn-Out PaymentPercentage") of (y) the amount, collectivelyif any, by which the “Earn-Out Payments”Revenue for such calendar year, and individually an “as finally determined under this Section 2.6, exceeds Two Hundred Fifty Million Dollars ($250,000,000) (the "Second Earn-Out Payment”) Hurdle"); provided, however, that in no event shall be due upon the occurrence aggregate amount of the Second Earn-Out Event on or before eight Amounts exceed Twenty Million Dollars (8) years $20,000,000) (the "Second Maximum Earn-Out Amount").
(i) Commencing with the first quarter of fiscal year 2006, Buyer shall cause to be delivered within 50 days following the Closing Dateend of each fiscal quarter during the Earn-Out Period a calculation showing the computation of the interest expense allocated to Buyer's Capital Markets Business for such quarter, which shall be based on average cost of short-term borrowings applied to average inventory balances and any such other adjustments consistent with the methodology described in the definition of "Earn-Out Revenue". Not later than ten (10) days after Buyer has filed its annual report on Form 10-K with respect to each calendar year in the Earn-Out Period, Buyer shall cause to be prepared and delivered to Seller (x) the audited consolidated statements of income of Buyer and its Subsidiaries (the "Buyer Audited Income Statement") for such calendar year prepared in accordance with Section 2.6(b)(ii), (y) a certificate of the chief financial officer of Buyer setting forth a calculation, in reasonable detail based upon such Buyer Audited Income Statement, of the amount of the Earn-Out Revenue (the "Earn-Out Revenue Calculation") for such calendar year prepared in accordance with Section 2.6(b)(ii) and (z) a statement, in reasonable detail, setting forth the computation of the Earn-Out Amounts (the "Earn-Out Amount Statement") for such calendar year.
(ii) The First Buyer shall cause to be prepared the Buyer Audited Income Statement and the Earn-Out Event or Revenue Calculation for each calendar year in the Second Earn-out Event means any one Out Period in accordance with GAAP and the accounting principles, procedures, policies and methods used by Buyer in connection with its audited consolidated statements of income included in Buyer's annual report on Form 10-K for the fiscal year ended December 31, 2004 consistently applied. From and after the Closing, in connection with the preparation and delivery of the following eventsBuyer Audited Income Statement and the Earn-Out Revenue Calculation for each calendar year in the Earn-Out Period and during the period of any dispute contemplated by this Section 2.6, whichever occurs first: Buyer shall give, and use its reasonable best efforts to cause its advisors to give, Seller and its authorized representatives reasonable access to the initiation relevant books and records, facilities and employees of Buyer (including the first human dosing in a Phase 2 clinical trial (A) under a U.S. Investigational New Drug Applicationwork papers of Buyer and its accountants relating to the preparation of such Earn-Out Revenue Calculations and the Earn-Out Amount Statements), or (B) such other drug application, approvable by the applicable ministry of healthsubject to customary confidentiality and indemnity agreements, as Buyer in may be necessary to enable Seller and its sole discretion determines is appropriate for any currently identified Company product candidate, including a secondadvisers to review such Earn-generation version of Syn 1001, Syn 1002, Syn 2001, Syn 2002 or any variation thereof, as well as any additional product candidates derived in whole or in part from Out Revenue Calculations and the Company’s product pipeline or research and development technology platform which additional product candidate(s) are mutually acceptable to Buyer and Sellers’ Agent (each a “Qualified Product Candidate”)Earn-Out Amount Statements.
(iiic) The foregoing notwithstandingWithin 25 days following its receipt of the Buyer Audited Income Statement, any remaining unpaid portion Earn-Out Revenue Calculation and Earn-Out Amount Statement for each calendar year in the Earn-Out Period, Seller shall deliver to Buyer either (i) its agreement as to the calculation of the Earn-Out Amount shall be deemed earned Revenue and shall be due and payable to Sellers Earn-Out Amounts as set forth therein or (ii) a written dispute notice, specifying in reasonable detail the event nature of its dispute of the occurrence calculation of the Earn-Out Revenue and Earn-Out Amounts as set forth therein; provided that Seller may dispute the calculation of the Earn-Out Revenue and Earn-Out Amounts as set forth therein only on or before eight (8) years following the Closing Date of either of basis (A) that such calculations were not made in accordance with GAAP and the initiation accounting principles, procedures, policies and methods used by Buyer consistently applied or were made in breach of Phase 3 clinical trials of a Qualified Product Candidate, subject to review and approval of the FDA or other applicable ministry of health as Buyer in its discretion deems is appropriate, Section 2.6(e) or (B) of arithmetic error; and, provided further, that the entering into dispute shall not go as to matters regarding the reported audited results of Seller but only as to the derivation of the Earn-Out Revenue and Earn-Out Amounts from such audited results. During the 30 days after the delivery of a definitive collaboration dispute notice to Buyer, Buyer and Seller shall attempt in good faith to resolve any such dispute and finally determine the Earn-Out Revenue and Earn-Out Amounts for such calendar year. If at the end of such 30-day period, Buyer and Seller have failed to reach agreement between Buyer or the Company and a third party with respect to such dispute, the development or commercialization of any Qualified Product Candidate which includes material present or future consideration payable by such third party matter shall be submitted to a nationally recognized accounting firm that is not the principal independent auditor for either Buyer or Seller and is otherwise neutral and impartial; provided, however, that if Buyer and Seller are unable to select such other accounting firm within 45 days after delivery of a dispute notice to Buyer, either party may request the CompanyAmerican Arbitration Association to appoint, whether in within 20 Business Days from the form date of upfront paymentssuch request, future milestone payments, reimbursements of clinical trials an independent public accountant with significant relevant experience and that is not the principal independent auditor for either Seller or other development expenses, royalties Buyer. The accounting firm or investments. (The First accountant so selected shall be referred to herein as the "Earn-Out Event, the Second Accountant." The Earn-Out Event Accountant shall act as arbitrator and resolve the events disputed portions of the calculation of the Earn-Out Revenue and Earn-Out Amounts as set forth in the foregoing clauses (A) and (B) are herein referred to collectively as the “Buyer Audited Income Statement, Earn-Out Events”, Revenue Calculation and individually as an “Earn-Out Event”).”
(iv) Anything herein to Amount Statement for the contrary notwithstanding, no Consideration Shares shall be delivered to Sellers from the Reallocation Escrow Sub-Account or applicable calendar year in the Earn-Out Escrow SubPeriod in accordance with the terms and conditions of this Agreement. In making such determination, the Earn-Account until Out Accountant may only consider those items and amounts as to which Buyer and Seller have disagreed within the time periods and on the terms specified above and must resolve the matter in accordance with the terms and provisions of this Agreement; provided that the determination of the Earn-Out Accountant will neither be more favorable to Buyer than reflected in such Buyer Audited Income Statement, Earn-Out Revenue Calculation and Earn-Out Amount Statement nor more favorable to Seller than reflected in Seller's dispute notice. The Earn-Out Accountant shall deliver to Seller and Buyer, as promptly as practicable after its appointment, a written report setting forth the resolution of each disputed matter and its determination of the Earn-Out Revenue and Earn-Out Amounts set forth in such Buyer Audited Income Statement, Earn-Out Revenue Calculation and Earn-Out Amount Statement as determined in accordance with the terms of this Agreement. Such report shall be final and binding upon the Parties to the fullest extent permitted under applicable Laws and may be enforced in any court having jurisdiction. Each of Buyer and Seller shall bear all the fees and costs incurred by it in connection with this arbitration, except that all fees and expenses relating to the foregoing work by the Earn-Out Accountant shall be borne by Buyer and Seller in inverse proportion as they may prevail on the matters resolved by the Earn-Out Accountant, which proportionate allocation will also be determined by the Earn-Out Accountant and be included in the Earn-Out Accountant's written report.
(d) On the second Business Day after the later of (x) the date Buyer and Seller agree to the calculation of the Earn-Out Revenue and Earn-Out Amounts set forth in the Buyer Audited Income Statement, Earn-Out Revenue Calculation and Earn-Out Amount Statement for each calendar year in the Earn-Out Period and (y) if Buyer and Seller are unable to agree on such calculation of Earn-Out Revenue and Earn-Out Amounts, the date that Buyer and Seller receives notice from the Earn-Out Accountant of the final determination of the reallocationamount(s) being so disputed, the Purchase Price shall be increased, on a U.S. dollar for dollar basis by an amount equal to such Earn-Out Amounts. Any payment so required to be made by Buyer shall be by transfer of immediately available funds to an account or accounts specified in writing by Seller and shall bear interest from the end of the applicable calendar year through the date of payment at the prime lending rate as reported in The Wall Street Journal.
(i) Until the determination of the 2008 Earn-Out Amounts, in the event Buyer reports the results of operations of Buyer's Capital Markets Business other than in its entirety within Buyer's Equity Capital Markets and Fixed Income Capital Markets segments or otherwise in a manner that differs in any material respect from the manner of reporting described in Buyer's annual report on Form 10-K for the fiscal year ended December 31, 2004, including in a manner that would reasonably be determined to adversely affect from Seller's point of view the computation of Earn-Out Revenue, then Buyer shall nonetheless prepare the Earn-Out Revenue Calculation on a basis consistent with the reporting in Buyer's annual report on Form 10-K for the fiscal year ended December 31, 2004, and shall prepare a reconciliation between the reported results for the Buyer's Capital Markets Business and the results as if they had been calculated in a manner consistent with the Buyer's annual report on Form 10-K for the fiscal year ended December 31, 2004, certified by the chief financial officer of Buyer. Seller shall have a reasonable opportunity to review and dispute such calculation and reconciliation pursuant to Section 2.6(c).
(ii) For all operational purposes and for all accounting and other financial reporting purposes for calculating the Earn-Out Revenue pursuant to this Section 2.6, Buyer shall, and shall cause its Subsidiaries to, operate Buyer's Capital Markets Business in a manner consistent with the past practice of Buyer in operating its own capital markets business segments prior to the Closing and shall not willfully take any action or omit to take any action to cause such business segments to be operated in a manner that would materially and adversely affect Seller's reasonable opportunity to be paid the Maximum Earn-Out Amounts, provided that that the foregoing shall not be deemed to require Buyer to retain any particular personnel with regarding Buyer's Capital Markets Business. Without limiting the generality of the foregoing, Buyer shall make commercially reasonable efforts to cause Buyer's Capital Markets Business to be capitalized in manner consistent with the past practice of Buyer in operating its own capital markets business segments prior to the Closing, subject to Buyer's ability to make changes to such operational and capital practices in the ordinary course of Buyer's Capital Markets Business and consistent with prudent management of Buyer's Capital Markets Business.
(i) If, prior to the determination of the 2008 Earn-Out Amounts, a Sale Transaction shall occur, Buyer shall pay to Seller, concurrently with the consummation of the Sale Transaction, an amount in cash equal to the sum of the Maximum Earn-Out Amounts less the aggregate amount of the Earn-Out Amounts paid prior to such consummation, which amount would then be the final amount paid to Seller with respect to amounts payable under this Section 2.6; provided, however, that if the Sale Transaction occurs after the determination of the 2007 Earn-Out Amounts but prior to the determination of the 2008 Earn-Out Amounts, the amount payable pursuant to this Section 2.6(f)(i) shall in no event exceed the lesser of (A) sum of the Maximum Earn-Out Amounts less the aggregate amount of the Earn-Out Amounts paid prior to such consummation and (B) the greater of (x) $10 million and (y) an amount equal to the sum of the 2008 Earn-Out Amounts if it were calculated based on the combined net revenues of Buyer's Capital Markets Business for calendar year 2008 through the date of consummation of the Sale Transaction (and giving effect to the proviso set forth in the definition of Earn-Out Revenue) annualized for the entire calendar year 2008.
(ii) If, prior to the determination of the 2008 Earn-Out Amounts, Buyer shall cause or permit to occur any material transaction that does not constitute a Sale Transaction, or shall take or omit to take any action, in either case that would materially and adversely affect Seller's reasonable opportunity to be paid the sum of the Maximum Earn-Out Amounts, Buyer and Seller shall negotiate in good faith to determine what, if any, of any Consideration Shares from the Closing Date Purchase Price modifications should be made to the Earn-Out Payments as provided in Section 1.3(c) abovePercentages, the Earn-Out Hurdles and the Maximum Earn-Out Amounts to minimize any adverse effect to the Earn-Out Revenue that may result from such transaction, action or omission.
Appears in 1 contract
Earn-Out Payments. On the terms and subject to the conditions of this Section 1.4, 1.4 the Buyer shall issue and deliver to the Sellers, and the Derivative Securities Holders who exercise their Derivative Securities on or before the Closing Date, following the Closing, in the proportions set opposite their respective names on Schedule 1, the Consideration Shares, if and to the extent earned as provided in this Section 1.4, in an aggregate amount equal to the total Consideration SharesUS$30,000,000, less (i) the Consideration Shares constituting the Closing Date Purchase Price after and less the reallocation as provided in Section 1.3(c) above, and (ii) Transaction Expenses divided by the Consideration Shares constituting the Contingent Consideration Average Closing Price (the “"Earn-Out Amount”"), which shall be due and payable in two equal installments as follows:
(i) The first 50% of the Earn-Out Amount (the “"First Earn-Out Payment”") shall be due upon the occurrence of the First Earn-Out Event on or before eight (8) years following the Closing DateEvent. The second 50% of the Earn-Out Amount (the “"Second Earn-Out Payment”", and together with the First Earn-Out Payment, collectively, the “"Earn-Out Payments”", and individually an “"Earn-Out Payment”") shall be due upon the occurrence of the Second Earn-Out Event on or before eight (8) years following the Closing DateEvent.
(ii) The First Earn-Out Event or the Second Earn-out Event means any one of the following events, whichever occurs first: (A) the initiation of the first human dosing in a Phase 2 I clinical trial (A) under a U.S. Investigational New Drug Application, or (B) such other drug application, approvable by the applicable ministry of health, as Buyer in its sole discretion determines is appropriate for any currently identified Company product candidate, including a second-generation version of Syn 1001, Syn 1002, Syn 2001, Syn 2002 or any variation thereof, as well as any additional product candidates derived in whole or in part from the Company’s 's product pipeline or research and development technology platform which additional product candidate(s) are mutually acceptable to Buyer and Sellers’ Agent ' Agents (each a “"Qualified Product Candidate”").
(iii) The foregoing notwithstanding, any remaining unpaid portion of the Earn-Out Amount shall be deemed earned and shall be due and payable to Sellers in the event of the occurrence on or before eight (8) years following the Closing Date of either of (A) the initiation of Phase 3 clinical trials of a Qualified Product Candidate, subject to review and approval of the FDA or other applicable ministry of health as Buyer in its discretion deems is appropriate, or (B) the entering into of a definitive collaboration agreement between Buyer or the Company and a third party with respect to the development or commercialization of any Qualified Product Candidate which includes material present or future consideration payable by such third party to the Buyer or the Company, whether in the form of upfront payments, future milestone payments, reimbursements of clinical trials or other development expenses, royalties or investments. (The First Earn-Out Event, Event and the Second Earn-Out Event and the events set forth in the foregoing clauses (A) and (B) are herein referred to collectively as the “"Earn-Out Events”", and individually as an “"Earn-Out Event”").”
(iv) Anything herein to the contrary notwithstanding, no Consideration Shares shall be delivered to Sellers from the Reallocation Escrow Sub-Account or the Earn-Out Escrow Sub-Account until the final determination of the reallocation, if any, of any Consideration Shares from the Closing Date Purchase Price to the Earn-Out Payments as provided in Section 1.3(c) above.
Appears in 1 contract
Samples: Stock Purchase Agreement (Sonus Pharmaceuticals Inc)
Earn-Out Payments. On (a) As additional consideration for the terms and subject to the conditions of this Section 1.4, the Buyer shall issue and deliver to the Sellers, and the Derivative Securities Holders who exercise their Derivative Securities on or before the Closing Date, following the Closing, in the proportions set opposite their respective names on Schedule 1, the Consideration Shares, if and to the extent earned as provided in this Section 1.4, in an aggregate amount equal to the total Consideration Shares, less (i) the Consideration Shares constituting the Closing Date Purchase Price after the reallocation as provided in Section 1.3(c) above, and (ii) the Consideration Shares constituting the Contingent Consideration (the “Earn-Out Amount”), which shall be due and payable in two equal installments as follows:
(i) The first 50% of the Earn-Out Amount Shares and subject to Section 8.12(e), Buyer shall pay to each of Xxxxxxx Xxxxxxxx and Xxxxx Xxxxx (each a “Seller Recipient” and collectively, the “Seller Recipients”) contingent consideration in an amount equal to the applicable Earn-Out Payment with respect to any four (4)-consecutive calendar quarters during the Earn-Out Period. “Earn-Out Payment” shall mean, as applicable, (i) $12,500,000 in consideration (without interest) based upon the achievement of $20,000,000 in EBITDA in any such four-quarter period (the “First Earn-Out PaymentMilestone”); (ii) shall be due upon the occurrence of the First $18,750,000 in consideration (without interest and less any prior Earn-Out Event on or before eight (8) years following Payment(s)) based upon the Closing Date. The second 50% achievement of the Earn$22,500,000 in EBITDA in any such four-Out Amount quarter period (the “Second Earn-Out PaymentMilestone”); and (iii) $25,000,000 in consideration (without interest and less any prior Earn-Out Payment(s)) based upon the achievement of $25,000,000 in EBITDA in any such four-quarter period (the “Third Earn-Out Milestone” and, and together with the First Earn-Out Payment, collectivelyMilestone and the Second Earn-Out Milestone, the “Earn-Out PaymentsMilestones”). For purposes of this Section 3.3, the “EBITDA” shall have the meaning given such term in the EBITDA Rules and individually shall be calculated in accordance with the EBITDA Rules set forth on Schedule A to this Agreement. For the avoidance of doubt, in no event shall either Seller Recipient be entitled to receive (x) an “Earn-Out Payment”Payment for an applicable Earn-Out Milestone more than once for such Earn-Out Milestone during the Earn-Out Period or (y) an aggregate amount pursuant to this Section 3.3(a) in excess of (1) $25,000,000 or (2) in the case of a reduction pursuant to Section 8.12(e), $23,215,000. In the event that the first Earn-Out Payment is reduced pursuant to Section 8.12(e), any payment due under Sections 3.3(a)(ii) or (iii) shall be due upon reduced by the occurrence of same amount. Notwithstanding the Second foregoing, any future Earn-Out Event on Payments shall be forfeited in the event such Seller Recipient’s employment with the Company or before eight one of its Affiliates is terminated by the Company for Cause (8) years following as defined in his Employment Agreement) or by such Seller Recipient without Good Reason (as defined in his Employment Agreement) prior to the Closing Date.
last day of a quarter in which any applicable Earn-Out Milestone is achieved. In the event that the employment of a Seller Recipient with the Company or one of its Affiliates is terminated (i) due to his death or Disability (as defined in his Employment Agreement), (ii) The by the Company without Cause or (iii) by such Seller Recipient for Good Reason on or prior to the last day of a quarter in which the Third Earn-Out Milestone is achieved, then, subject to the actual achievement of the First Earn-Out Event or Milestone within the Second Earn-out Event means any one of Out Period and Section 8.12(e) (x) the following events, whichever occurs first: the initiation of the first human dosing in a Phase 2 clinical trial (A) under a U.S. Investigational New Drug Application, or (B) such other drug application, approvable by the applicable ministry of health, as Buyer in its sole discretion determines is appropriate for any currently identified Company product candidate, including a second-generation version of Syn 1001, Syn 1002, Syn 2001, Syn 2002 or any variation thereof, as well as any additional product candidates derived in whole or in part from the Company’s product pipeline or research and development technology platform which additional product candidate(s) are mutually acceptable to Buyer and Sellers’ Agent (each a “Qualified Product Candidate”).
(iii) The foregoing notwithstanding, any remaining unpaid portion of the Earn-Out Amount shall Payment to be deemed earned and shall be due and payable made to Sellers in such Seller Recipient if the event of the occurrence on or before eight (8) years following the Closing Date of either of (A) the initiation of Phase 3 clinical trials of a Qualified Product Candidate, subject to review and approval of the FDA or other applicable ministry of health as Buyer in its discretion deems is appropriate, or (B) the entering into of a definitive collaboration agreement between Buyer or the Company and a third party with respect to the development or commercialization of any Qualified Product Candidate which includes material present or future consideration payable by such third party to the Buyer or the Company, whether in the form of upfront payments, future milestone payments, reimbursements of clinical trials or other development expenses, royalties or investments. (The First Earn-Out EventMilestone is achieved shall be reduced by the First Shortfall Percentage, (y) the portion of the Earn-Out Payment to be made to such Seller Recipient if the Second Earn-Out Event and Milestone is achieved shall be reduced by the events set forth in the foregoing clauses (A) Second Shortfall Percentage and (Bz) are herein referred to collectively as the “Earn-Out Events”, and individually as an “Earn-Out Event”).”
(iv) Anything herein to the contrary notwithstanding, no Consideration Shares shall be delivered to Sellers from the Reallocation Escrow Sub-Account or portion of the Earn-Out Escrow Sub-Account until Payment to be made to such Seller if the final determination of the reallocation, if any, of any Consideration Shares from the Closing Date Purchase Price to the Third Earn-Out Payments as provided in Section 1.3(c) aboveMilestone is achieved shall be reduced by the Third Shortfall Percentage.
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Earn-Out Payments. On (a) Subject to the terms and subject to the conditions of this Section 1.4Agreement, the Buyer OAOT shall issue and deliver make additional cash payments to the Sellers, and Shareholders (the Derivative Securities Holders who exercise their Derivative Securities on or before the Closing Date, following the Closing, "Earn-Out Payments") in the proportions set opposite their respective names on Schedule 1, the Consideration Sharesamounts equal to ten percent (10%) of OAOT's Pre-Tax Profit (defined below) in excess, if and to any, of $2,000,000 (the extent earned "Threshold," as adjusted as provided in this Section 1.4the following sentence), in for the three years ended December 31, 1999, 2000 and 2001 (collectively, the "Earn-Out Period"); provided, however, that the total of all Earn-Out Payments payable for the Earn-Out Period shall not exceed an aggregate amount equal to the total Consideration Sharesof $5,000,000; and provided, less further, that no Earn-Out Payment shall be payable if (i) the Consideration Shares constituting the Closing Date Purchase Price after the reallocation as provided any Shareholder is then in Section 1.3(c) abovebreach in any material respect of any representation, and warranty, covenant or agreement contained herein or (ii) any write-down of OAOT's investment in the Consideration Shares constituting the Contingent Consideration (the “Earn-Out Amount”), which Company is required in accordance with Statement of Financial Accounting Standards No. 121. The Threshold shall be due and payable increased in two equal installments as follows:
(i) The first 50% each year of the Earn-Out Amount (the “First Earn-Out Payment”) shall be due upon the occurrence of the First Earn-Out Event on or before eight (8) years following the Closing Date. The second 50% of Period to which the Earn-Out Amount Payment relates by the ratio obtained by dividing (A) the “Second total shares of common stock of OAOT ("OAOT Common Stock") issued and outstanding at the end of the year to which such Earn-Out Payment”Payment relates by (B) the total shares of OAOT Common Stock issued and outstanding as of June 30, 1998; provided that such amount outstanding as of June 30, 1998 shall be deemed to include (y) all shares, if any, issued or to be issued in connection with OAOT's proposed acquisition of Enterprise Technology Group and together (z) all shares of OAOT Common Stock issuable upon the exercise of vested and unexercised stock options outstanding as of June 30, 1998.
(b) As used in this Section 2.8, "Pre-Tax Profit" means income determined in accordance with GAAP applied on a consistent basis without taking into account any of the First Earn-Out Payment, collectively, the “following items: (i) any adjustments for Earn-Out Payments”, and individually an “Earn-Out Payment”) shall be due upon the occurrence of the Second Earn-Out Event on or before eight (8) years following the Closing Date.
; (ii) The First Earn-Out Event deductions or the Second Earn-out Event means any one of the following events, whichever occurs first: the initiation of the first human dosing in a Phase 2 clinical trial (A) under a U.S. Investigational New Drug Application, or (B) such other drug application, approvable by the applicable ministry of health, as Buyer in its sole discretion determines is appropriate accruals for any currently identified Company product candidatefederal, including a second-generation version of Syn 1001state, Syn 1002, Syn 2001, Syn 2002 local or any variation thereof, as well as any additional product candidates derived in whole or in part from the Company’s product pipeline or research and development technology platform which additional product candidate(s) are mutually acceptable to Buyer and Sellers’ Agent (each a “Qualified Product Candidate”).
foreign income Taxes; (iii) The foregoing notwithstandingnet operating loss carryforwards or carrybacks; (iv) any change in GAAP in comparison to those in effect at the Closing Time; and (v) any items that would be considered extraordinary items under GAAP; provided, however, that if the business of OAOT as presently conducted is operated during any remaining unpaid portion of the Earn-Out Amount shall be deemed earned and shall be due and payable to Sellers in Period as a division of a corporation or other business entity other than OAOT, the event determination of the occurrence on or before eight (8) years following Pre-Tax Profit shall include such adjustments as are deemed appropriate so that the Closing Date of either of (A) the initiation of Phase 3 clinical trials of a Qualified Product Candidate, subject to review and approval of the FDA or other applicable ministry of health Pre-Tax Profit would be as Buyer in its discretion deems is appropriate, or (B) the entering into of a definitive collaboration agreement between Buyer or the Company and a third party with respect close as possible to the development or commercialization Pre-Tax Profit that would have existed if OAOT were operated as a separate corporation during that portion of any Qualified Product Candidate which includes material present or future consideration payable by such third party to the Buyer or the Company, whether in the form of upfront payments, future milestone payments, reimbursements of clinical trials or other development expenses, royalties or investments. (The First Earn-Out Event, the Second Earn-Out Event and the events set forth in the foregoing clauses (A) and (B) are herein referred to collectively as the “Earn-Out Events”, and individually as an “Earn-Out Event”).”
(iv) Anything herein to the contrary notwithstanding, no Consideration Shares shall be delivered to Sellers from the Reallocation Escrow Sub-Account or the Earn-Out Escrow Sub-Account until the final determination of the reallocation, if any, of any Consideration Shares from the Closing Date Purchase Price to the Earn-Out Payments as provided in Section 1.3(c) abovePeriod at issue.
Appears in 1 contract
Samples: Stock Purchase Agreement (Oao Technology Solutions Inc)
Earn-Out Payments. On (a) Subject to the terms continued employment of Xxxxxx Xxxxxx with the Purchaser (except in the event of the death or disability of Xxxxxx Xxxxxx as set forth in Section 2.4(b) below), in addition to the Closing Payment, Purchaser shall pay to Xxxxxx Xxxxxx as compensation for services or his heirs or legal successors an amount equal to One Million One Hundred Thousand Dollars ($1,100,000) (the “Retention Earn-Out”) and up to an additional Four Hundred Thousand Dollars ($400,000) (the “Performance Earn-Out”) over a three (3) year period commencing on the Closing Date on the schedule and subject to the conditions of this Section 1.4, the Buyer shall issue and deliver to the Sellers, and the Derivative Securities Holders who exercise their Derivative Securities on or before the Closing Date, following the Closing, in the proportions set opposite their respective names forth on Schedule 1, the Consideration Shares, if and to the extent earned as provided in this Section 1.4, in an aggregate amount equal to the total Consideration Shares, less 2.4(a) attached hereto (i) the Consideration Shares constituting the Closing Date Purchase Price after the reallocation as provided in Section 1.3(c) above, and (ii) the Consideration Shares constituting the Contingent Consideration (the “Earn-Out Amount”), which shall be due and payable in two equal installments as follows:
(i) The first 50% of the Earn-Out Amount (the “First Earn-Out Payment”) shall be due upon the occurrence of the First Earn-Out Event on or before eight (8) years following the Closing Date. The second 50% of the Earn-Out Amount (the “Second Earn-Out Payment”, and together with the First Earn-Out Payment, collectively, the “Earn-Out Payments”) subject however, to applicable federal and individually an “Earn-Out Payment”) shall be due upon the occurrence of the Second Earn-Out Event on or before eight (8) years following the Closing Date.
(ii) The First Earn-Out Event or the Second Earn-out Event means any one of the following eventsstate income and employment tax withholding requirements. Except as otherwise provided in Schedule 2.4(a), whichever occurs first: the initiation of the first human dosing in a Phase 2 clinical trial (A) under a U.S. Investigational New Drug Application, or (B) such other drug application, approvable by the applicable ministry of health, as Buyer in its sole discretion determines is appropriate for any currently identified Company product candidate, including a second-generation version of Syn 1001, Syn 1002, Syn 2001, Syn 2002 or any variation thereof, as well as any additional product candidates derived in whole or in part from the Company’s product pipeline or research and development technology platform which additional product candidate(s) are mutually acceptable to Buyer and Sellers’ Agent (each a “Qualified Product Candidate”).
(iii) The foregoing notwithstanding, any remaining unpaid portion of case the Earn-Out Amount Payments (including any Earn-Out Payments made under Section 2.4(b) below) shall be deemed earned paid one-half in cash and one-half in shares of Purchaser’s Common Stock as determined by reference to Section 2.6 below. Each Earn-Out Payment amount (including any Earn-Out Payments made under section 2.4(b) below) shall be calculated as of the end of each period set forth in Schedule 2.4(b) (each, a “Calculation Date”) and shall be due determined and payable paid to Sellers Xxxxxx Xxxxxx or his heirs or legal successors, promptly upon completion by Purchaser of all necessary accounting work, to be completed by Purchaser in the Ordinary Course, but in no event of the occurrence on or before eight (8) years following the Closing Date of either of (A) the initiation of Phase 3 clinical trials of a Qualified Product Candidate, subject to review and approval of the FDA or other applicable ministry of health as Buyer in its discretion deems is appropriate, or (B) the entering into of a definitive collaboration agreement between Buyer or the Company and a third party with respect to the development or commercialization of any Qualified Product Candidate which includes material present or future consideration payable by such third party to the Buyer or the Company, whether in the form of upfront payments, future milestone payments, reimbursements of clinical trials or other development expenses, royalties or investments. (The First Earn-Out Event, the Second Earn-Out Event and the events set forth in the foregoing clauses (A) and (B) are herein referred to collectively as the “Earn-Out Events”, and individually as an “Earn-Out Event”).”
(iv) Anything herein to the contrary notwithstanding, no Consideration Shares shall be delivered to Sellers longer than 45 days from the Reallocation Escrow Sub-Account or the Earn-Out Escrow Sub-Account until the final determination of the reallocation, if any, of any Consideration Shares from the Closing Date Purchase Price applicable Calculation Date. In addition to the Earn-Out Payments Payments, Xxxxxx Xxxxxx shall be eligible to receive as provided compensation the “Over-Achievement Bonus” as set forth in Section 1.3(cSchedule 2.4 (a) abovesubject however, to applicable federal and state income and employment tax withholding requirements.
(b) No Earn-Out Payment will be made for any period in which Xxxxxx Xxxxxx is not an employee of the Purchaser on the applicable Calculation Date, provided, however, that in the event of termination of Xxxxxx Xxxxxx’x employment due to the death or disability (as defined in the Employment Agreement attached hereto as Exhibit C) of Xxxxxx Xxxxxx, or in the event the Purchaser terminates Xxxxxx Xxxxxx’x employment without Cause (as defined in the Employment Agreement), Xxxxxx Xxxxxx terminates his employment for Good Reason (as defined in the Employment Agreement), or Xxxxxx Xxxxxx’x employment is terminated upon a Change in Control (as defined in the Employment Agreement), as compensation, the Purchaser shall pay to Xxxxxx Xxxxxx or his heirs or legal successors as of each subsequent Calculation Date as compensation for services subject however, to applicable federal and state income and employment tax withholding requirements, the Retention Earn-Out amount that would have been payable to Xxxxxx Xxxxxx as compensation as of such Calculation Date and the Performance Earn-Out amount that would have been payable to Xxxxxx Xxxxxx as of such Calculation Date if the maximum Approved Sales Orders Targets had been met.
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